Good. Well, I think everyone is here, let's get going. Welcome to the 2019 Preliminary Results for MoneySuperMarket Group. I am Mark Lewis, the CEO, and we're going to follow the usual running order this morning. In a minute, Scilla will take over, run you through the financial delivery for the year and our update on our market, and then I will come back and talk about progress on our strategic delivery.
After that, we'll take some Q&A. Coming to the chase, it has been a year of delivery for the reinvent strategy. For our customers, once again, we have helped households save over GBP 2 billion. For investors, we delivered the planned return to profit growth, with revenue up 9% and EBITDA up 7%, while also redistributing GBP 100 million in cash throughout the year. We delivered this despite the headwinds in the market for price comparison.
The headwind that comes from the shift to mobile continued in 2019, and if anything, grew a little stronger in the year. Our successful work to increase conversion rates and optimize the customer experience, combined with our disciplined approach to marketing, is combating these trends and underpinning the return to profit growth. With regards to new market growth, we are pleased with the work to drive increased retention through delivering a more proactive and personalized MoneySuperMarket experience.
We now have over 600,000 customers on MoneySuperMarket having their bills proactively monitored. These customers visit us more frequently, search for more products, save more money, and are worth more for the business. This gives us confidence to keep pushing with this work, and we will support the brand with increased commitment in 2020. Similarly, we think that we can bring a personalized and automated service to MoneySavingExpert users.
This will start in energy, where we will update the MoneySavingExpert Cheap Energy Club to add what we believe will be the U.K.'s most trusted auto-switching service in the first half of 2020. Over to Scilla for a summary of the financial results.
Thanks, Mark, and morning, everyone. Before I start, just a reminder that in these numbers, we've adjusted the 2018 comparative to IFRS 16, so you can get a good like-for-like sense of performance. Looking at the financial highlights, and as Mark said, we had a good year. Top line growth of 9%, or 5% if we exclude Decision Tech.
EBITDA grew slightly behind revenue, which reflected growth margin pressures offset with some good cost control. Our reported EPS grew 11%, ahead of that EBITDA growth, which reflected both lower adjusting items and a lower effective tax rate. We continued to leverage our technology platform, our reinvestment rate fell two percentage points to 9%. Cash flow was very strong again, over GBP 110 million, reflecting the dynamics of our marketplace model.
We're pleased to have announced an increase in our full-year dividend of 6%, reflecting our progressive dividend policy. As you'll have seen from the statement this morning, our users remain engaged. We continue to have a strong group NPS of 74. Our active users grew slightly to 13.1 million, and we're proud to have helped households save GBP 2 billion.
Before I go into more detail on our performance, I just wanted to take a step back and remind ourselves of the markets in which we operate, which we still expect to grow 4%-5% over the coming years. Let's take a look at insurance first, which as you know, is the largest of our markets. It's still a growing market, albeit at higher rates and channels other than car. Just a reminder that car for us is less than 50% of our insurance revenue.
Car itself is also still in growth. It is the most highly penetrated from a switching perspective, total policies are still growing, and that's due to both an increase in the car park and people continuing to drive later in their lives. There is still the potential in car to grow switching through reducing the frequency between switching.
If you look at the slide, and here I focus on the three largest channels in insurance, so that's car, home, and travel. There are 68 million policies that are written a year in those channels. Clearly, as you know, it's a market where the end product is time limited, where you get an annual renewal notice, where we and our competitors have invested for a number of years in marketing, and where a consumer is often required to hold the product.
It may be no surprise then that of those 68 million policies, just over a third are already switched, and many, 27%, are switched using a price comparison website. Let's just look at what the drivers are for growth, and these will vary a little by type of insurance, but I'd highlight three main things.
Firstly, increasing switching frequency, particularly in car. Secondly, driving penetration within other channels. Finally, making sure that you deliver a good breadth of panel so that you can fulfill different consumers' needs, and making sure that you do so at a good price point. An example here might be making sure that your panel can cover pre-existing medical conditions in travel insurance. What have we done, or what are we doing?
Well, our approach to insurance is to make sure that we've got effective personalized switching prompts when policies are coming up for renewal. We've also looked for prompts that are going to help make our brand more front of mind and allow us to retain customers. What you've seen here is our first steps. There are our MOT and car tax reminders.
We have and continue to develop broad panels of providers. As you'll have seen from our website, we're particularly focused on our price competitiveness within car. If you look at Money, and Money splits into two broad categories, banking and borrowing. Over 75% of our revenue comes from that borrowing side. Think credit products, think cards, and loans. In general, and I'm talking at a market level, Money is a more promotional market.
Rates at a macro level will drive whether banking or borrowing is in the ascendancy. At a customer level, promotions also act as a trigger into a switch. Rates and deals will drive search volumes. There's no regular call to action in that vertical, as you know. You kind of don't get that sticker shock that you might get when you open your annual insurance renewal.
Confidence is also a key element of the decision-making process. Consumers often still take the product from their own high street bank. You see a lot of that reflected in the statistics in the slide. Here we're looking at credit cards and loans, and there are 44 million in existence. Only about a quarter of the market is switched, and only 7% are switched by a price comparison website. There's lots of room to drive penetration here.
Again, let's have a look at those kind of drivers of growth. Well, again, I'm going to call out three things. There's a rule of three. You'll see the theme here. Firstly, building certainty for customers that what they see is what they get. Secondly, making sure that you've got the promotional products that you need in order to capture the customer attention in the first place.
Finally, making sure that you're creating engagement trigger points. Again, looking at what we're doing to address those three things. Well, our eligibility tools do give consumers the confidence to search knowing that their credit score isn't going to be impacted. Importantly, that they're going to be presented with products and rates that they, as an individual, are likely to get.
We also are very lucky to have the power of MoneySavingExpert within the group. As you know, it's a very, very highly trusted brand and one that can drive engagement through editorial recommendation. Finally, we've looked to create prompts that can become engagement levers. You've seen the launch of Credit Monitor as a first step here towards driving more frequent interaction using those changes in the credit score to drive engagement.
We've recently added a fraud alert function here, too. Let's look finally at home services. These are nicely growing markets, both in energy and home communication, and there's significant headroom to drive higher switching penetration in channels such as broadband. Today I'm going to focus on energy, which for us is over 75% of revenue in that vertical.
It is the largest market. We're calling out 52 million energy accounts. Here, just remember that gas and electricity at the same account would count as two accounts in those numbers. About 20% of accounts are switched in the year, and that's online and offline, but is only including provider switches. Of those about half are switched via a price comparison website. Again, the opportunity is still to increase switching penetration.
As you know, though, this has traditionally been a very low engagement category and lacks a call to action to drive that sort of switching consideration. Growing here is really a twofold challenge. It's firstly about engaging customers in the first place, overcoming that consumer inertia. It's also making sure that once the customer is at the top of the funnel, you make sure that they progress through that funnel.
That's often about actually helping them understand that it's easier to take that switch than they may believe. Through 2019, we've seen the price cap and the media reporting of it acting as a call for action in energy. MoneySavingExpert's editorial power has helped in engaging their users.
We've also, as you know and as we've shared before, we've had some really good wins in the last couple of years in improving the conversion of our customers as they go through the journeys. Moving forward, and Mark's going to come on to talk to you about this in more detail, our new monitoring and auto switch proposition is going to help us grow further within the vertical. That's the market. Let's go back to our performance.
As I've already said, a good year of growth with revenue growing 9% at the headline level or 5% if we exclude Decision Tech. We had solid performance in insurance and both in Car and home we had good growth in the first half, but those headwinds from natural search in the second half did act to temper full year growth.
Money performance was disappointing at -2% and the lack of promotional product that we discussed at the interims continued into the second half. We also saw a slowdown in the growth of searches for credit products towards the end of the year. We had strong energy switching throughout the year, and as you know, there were a number of reasons for that. We've flagged before that our commercial teams did a fantastic job securing great deals through the year.
The press coverage of the price cap did help it to generate engagement, and the power of our brands and the journey improvements that we've made enabled us to capitalize on those opportunities. We finished the year with really good growth at 39% for home services. Decision Tech also proved a good acquisition and delivered pleasing growth for us throughout the year. Moving on now to the income statement and looking at the shape of the P&L.
As we've seen, adjusted EBITDA grew 7% on the year, so lower than that top line growth, which was really reflecting a reduction in the growth margin rate. We delivered a growth margin of 69%. That was over two percentage points lower than in 2018. That reduction was driven by three broad main things.
Firstly, the consolidation of Decision Tech, where as you know, their B2B margins are lower than the B2C margins of the rest of the group. The trends for customers to transition to mobile continued to put pressure on margin, that continued to cost us in the region of 100 basis points in 2019.
Finally, as we touched on with our Q3 trading statement, we did experience some volatility in our natural search rankings during the second half, that meant that we missed out of higher margin traffic sources. Those natural search changes impacted us, particularly in insurance, where prior to the summer, we'd always enjoyed consistently high positions on the search page. Organic search has been a really key and core strength of our team over recent years, and we still remain very confident in our skills and capabilities here.
Whilst I can't tell you that we're now back to those consistently higher positions that we previously enjoyed, we have seen some improvement in 2020. Continuing down through the P&L, depreciation and amortization was in line with plans, and the year-on-year increase reflects some large technology assets that went live late in 2018.
We had GBP 5 million of adjusting items in the year, GBP 2 million relating to the amortization of acquisition intangibles, and the balance relating to strategy and reorganization costs. As we move into 2020, I expect that line will only include the ongoing amortization of acquisition intangibles. The reduction year-on-year, though, in adjusting items and a lower effective tax rate drove an increase in net profit ahead of EBITDA growth at plus 11%. Looking at costs, and these grew 11%, or again, 5% if we exclude Decision Tech.
That increase was driven by two key main things, marketing, as you can see, and depreciation and amortization, which I've already explained. Let's take a look at those marketing costs, which grew 15% on the year. In online spend, our approach to digital marketing has remained unchanged. That, as you know, is that we'll build up to break even on our first transaction. TV and radio remain broadly flat year on year, despite the relaunch of the brand.
As we discussed with the interim, that increase in the other category here is driven by two things, the inclusion of the full year of DT costs and the strong energy performance, which drove an associated increase in cashback costs to customers who switched using Cheap Energy Club. The marketing margin, therefore, reflects the growth margin trend that I've already discussed, falling to 61% from 63% in 2018.
From a tech perspective, our costs reduced year on year, both in absolute terms and as a percentage of revenue, as we continue to leverage our group platform. That total tech spend also benefited from our teams now being insourced rather than us having to pay an outsource margin. In our CapEx, we spent GBP 2 million on our new tech hub in Manchester, and we expect to spend slightly less than this in 2020 on the refurbishment of our Ewloe office.
That's in addition to the tech CapEx of 2020 of about GBP 10 million. As we've seen, our cash flow generation remained strong during the year, and we delivered GBP 140 million of operating cash. We did have a working capital outflow this year of GBP 5 million, and that was driven mainly by an increase in receivables.
That in turn reflected a mix into channels and providers with longer working capital cycles. Our strong cash flow continued, though, to enable us to return significant funds to shareholders, and that was GBP 100 million in the year, and we finished the year with net cash of GBP 24 million. Looking now at our capital allocation framework, as you know, we continue to enjoy strong cash generation, we expect that to continue into 2020 and beyond.
Our framework of how we deploy that cash remains unchanged. As you know, funding our organic growth remains our top priority. Comes our commitment to a progressive ordinary dividend, so growing alongside earnings. After that, we'll look to M&A to support and accelerate our strategy. Finally, as ever, we don't need to retain large cash balances, we remain committed to returning excess cash to shareholders.
Finally, I just wanted to give you a bit more color on guidance for the year ahead. As we've seen, we remain confident of meeting full-year market expectations for the year. You'll have seen in the statement that we flagged that year to date, so the first six weeks, trading dynamics have improved compared with the exit rate of 2019. We've also flagged before, we expect the car insurance market to return to premium inflation this year, and we expect that Money will return to growth during 2020.
Mark will come on to this, the initial experience of our monitor customers is looking positive, we've chosen to spend a further £5 million in 2020 on brand in order to support that initiative. I do expect performance to be second half-weighted, which reflects broader market dynamics, prior year comparatives, and the timing of some initiatives.
Finally, just to watch out and a reminder, this is the year that the HMRC payment calendar changes. We'll be making six installments of corporation tax in the year rather than four normally. Do remember to model that cash outflow into your model. Thank you very much, and I'll hand you back to Mark.
Brilliant. Thank you, Scilla. Great. All right. Look, as Scilla's clearly laid out, this is a business with very strong fundamentals, whether that's our scale, whether that's our brand position in markets with structural growth, whether that's our highly efficient marketplace model or the strong cash generation. Let me now take a few minutes to walk us through the delivery against our strategic goals. Recap that in our Reinvent Strategy, we have two sides.
On the left, Re-accelerate Core Growth, our work enhancing the existing comparison model with a real focus on customer experience optimization. On the right, New Market Growth, areas where we are positioning the group to outperform the market through changes to the proposition and extending the range of services we offer. Looking first at the left-hand side, Re-accelerating Core Growth. It has been a strong year for both our major consumer brands.
As you know, we rebranded MoneySuperMarket around this time last year with positive results. Look out for new TV advertising to come soon. The brand's Net Promoter Score has moved forward in the year. On the provider side, I'm pleased with the strength of the panel, which we believe is the best in the business across multiple categories.
MoneySavingExpert had a standout year for its users with record numbers of visitors and tip signups. The strength of this truly consumer championing editorial content underlined MoneySavingExpert as the go-to place for the U.K. public to understand the things that impact their finances. Record traffic around the PPI claim deadline, of course, a fantastic job of helping millions of users navigate the introduction of price caps in energy.
As you know, at the bottom there, over the last couple of years, we have added a new capability, customer experience optimization. It is now business as usual, and it is working across the brands and continues to work for us. As you know, we guard our actual conversion rates as commercially sensitive. I do want to make sure you all understand the dynamics of how critical this work is to combat the headwinds in the market.
Since we started this work, we have increased conversion rates. The chart here actually shows our conversion rates in the major insurance categories. As you can see, the conversion rates have increased on desktop. More importantly, bottom left, they have also increased on mobile. This is really good work. The headwind comes from the fact that the conversion rates on mobile are lower than those on desktop.
As you know, this is true in just about all markets, be that retail, travel, or indeed comparison. As we see the mix shift towards mobile, the net effect is a suppression of the gains we're delivering, compounded by an increased prominence of paid search over search engine optimization on mobile. Of course, if we hadn't built this capability, the impact on the business would be more challenging.
Mobile migration continues, and in 2019 it actually accelerated a little. We have previously discussed about a one percentage point margin headwind from this, and I suspect that continues into 2020. Let's have a look at new market growth. In a minute, I'm going to spend a little bit of time talking about our work on personalization. First, let me just give some quick updates on our progress in B2B and in mortgages.
It's been an encouraging first full year for our B2B business Decision Tech. They have posted double-digit growth, showing strength in their historical core of home communications. In 2019, we added energy switching to the Decision Tech commercial offering using our group technology stack. This has resulted in a rapid market entry with what we believe to be a leading offer. Decision Tech has now secured six commercial partnerships in energy.
On mortgages, we continue our work to digitize the mortgage market. We've added eligibility factors to the Podium platform, resulting in higher converting leads for our broker partners. We have direct integrations live with four of the market's leading lenders, offering product transfer rates for existing mortgage customers. We'll continue to deepen these direct integrations through 2020.
Earlier this month, we expanded our integration with Nationwide to offer customers an instant online decision in principle on their mortgage without leaving the MoneySuperMarket site. A first for any U.K. comparison site. Right. Let's talk about personalization. This is one of the key initiatives for the group. Why? It speaks to the core comparison proposition, has the potential to fundamentally enhance the economics of the business.
We all know what a positive economic model we've built with price comparison, that it provides real value to the user, that it matches risk profiles to the providers, and that it generates efficient returns for the business. Let's face it, we all know that it also has an Achilles heel, that the customer experience doesn't naturally prompt people to repeat with a frequency. As such, we choose to invest significantly in customer acquisition costs. There's another way.
Once you have sorted out your car insurance, you actively don't want to think about it for another year. We have to spend money to remind and prompt you to come back to us when you do. We do this well, but we think we can do it better. What have we been doing and how is it going? Following the brand relaunch of MoneySuperMarket, we have now moved over 600,000 customers to monitored services.
What does it mean? It means that we are being proactive on their behalf. They can now have a personalized homepage that summarizes the status of their main bills and credit score all in one place. It means they have their credit score for free in their MoneySuperMarket account, and we will alert them with updates and recommendations.
It means we will monitor their energy tariff, check it each month, and alert them to the next best deal when we find it. It means we will automatically re-quote their car insurance and let them know when their tax and MOT are due. Let me be really clear. We do this because they are very helpful services for the customer, but explicitly so that we give them a reason to visit more frequently than they otherwise would.
What does this look like for the customer? Well, it changes their relationship with MoneySuperMarket, moving from being the place which they turn to if they get an insurance renewal that they don't like, to being a trusted brand that is being personalized and proactive on their behalf, helping them to stay on top of their bills across multiple categories, allowing them to get Get Money Calm.
Remember, we can do this because of our unique position as a diversified comparison business, running multiple categories off our own proprietary technology stack and with a single view of the customer. The shift has the potential to enhance the underlying economics of price comparison. Let's have a look at what we are finding. We've been scaling our monitored services through 2019, and the impact on customer value is significant.
In short, customers of monitored services return more, save more money on their bills, and have higher value to the business. What's on the chart? Well, the chart shows directionally accurate, but you won't be surprised to hear commercially sanitized data for Credit Monitor customers, compared to a statistically representative sample cohort of customers. First thing to note on the left is that monitor customers visit more and run more inquiries for products. This is obviously a good thing.
Significantly, though, bottom left, they visit more across the range of categories we offer with increased cross-sell. The economics of monitor customers are also different. When they visit us, they tend to come through paid search less than similar customers, which is obviously favorable. In return, we spend a little more in the cost of servicing their inquiries, for example, running the soft credit searches or providing the credit score.
When you add all this up, the increased number of visits and cross-sell wins out, and these customers are already demonstrating higher value to the group. Our plans in 2020 are clear, seeking to increase the number of customers using our monitored services and to support the MoneySuperMarket brand with increased marketing activity. That covers MoneySuperMarket. I want to spend a couple of minutes talking about MoneySavingExpert.
Remember, this brand is a true consumer champion with independent editorial content, helping users navigate their finances. I mentioned earlier that 2019 was a record year for MoneySavingExpert, and indeed, just last week, you might have noticed it was voted the U.K.'s most recommended brand in the independent YouGov survey that tracks the Net Promoter Score of all U.K. brands.
MoneySavingExpert is a big player in energy switching, offering significant savings for users. It offers a full market comparison, which means it tries to show the savings available from all 60 or so of the providers in the market. The breadth of panel results leads to market-leading savings. There are currently about 130 tariffs on MoneySavingExpert cheaper than the Ofgem price cap, with savings running at around GBP 350-GBP 370 for a typical user.
When it comes to working out how best to approach an auto-switching service worthy of the MoneySavingExpert brand, we knew we had to build something that delivers real value for users and match the savings that they could achieve if they wanted to do it themselves.
This is what has driven us to actually sit out what I would call the first wave of auto-switching services until we could be confident that we could build one that was worthy of the MoneySavingExpert brand. The reality is that auto-switch is inherently compelling for users, but it is not straightforward. In order to make it work as a marketplace, there are a number of challenges that need to be overcome. We understand these because we have years of user insight, years of behavioral data, and long-standing relationships with the energy providers.
We think it's important that users get the best price tariff for them. The myth is that people just want the cheapest, but the reality is most users don't actually choose the lowest price tariff. They choose the cheapest tariff that meets their personal preferences for factors such as service, brand reputation, green energy, and so on.
Users like the idea of convenience, but they don't want to lose control of not knowing who their energy is with, of being switched too frequently, or of being hit by surprise direct debits. For the providers, it is even more stark. Done badly, auto-switching can remove the ability for providers to differentiate on anything but price. Too bad you might say, but the reality is the combination of short duration tariffs with limited ability to differentiate is fundamentally challenging to provider economics.
If you don't have the right providers on your panel, then you can't offer the right value to the user, and this is why we have not been excited or felt able to endorse early auto-switching services. We think we have found a way to deliver auto-switching that can be trusted by users and work for providers alike. It will launch in the first half. It is under wraps until then, but I've asked Martin Lewis, the founder of MoneySavingExpert, to talk you through the proposition and our views on the market. You can play the video.
When I'm on my TV roadshows and I'm talking about energy, people tell me they're scared to do a comparison. I bring them over to the computer, I say, "I'll help you do it," and I'm there, and I ask them to fill in their details. No problem. That bit's easy.
That's not what they mean by scared to do a comparison. The bit that really panics them is when they get the results and there's a long list of providers that they've never heard of, some with no customer service ratings, some with limited customer service ratings, and they're made to make a choice, and a choice that they don't really understand. At that point, they often look at me and go, "Can't you just do it for me?" Of course, the premise of auto-switching is one that's very attractive to people.
It's also one that so far I've not been willing to put my name or MoneySavingExpert's name to because I don't believe the service lives up to what people really want. There are 2 main problems with the offerings out there. The first of all, there aren't enough providers, you're not going to get a really good tariff. We need most of the market to be engaged and allowing auto-switch to happen.
Second, there's no choice. People aren't one homogenous set. When I'm talking to them about energy, some really care about service, some care about whether it's green, some care about whether it's service or green, some want a fixed, some want a name that they've heard of, and of course, all care about price. Actually, different people will choose different providers from the same choice.
When I was thinking about what MoneySavingExpert's auto-switch should be, for me, it wasn't simply just porting people to a new cheap provider each time, because that takes the choice away from them. It had to involve a comparison. The service is auto-switch, but the underlying tech is auto compare and switch. We will first of all find out from people what they want.
What are your preferences? What matters to you? How much is price, green, fixed, name you know, service? How much do all of those matter to you? Once we know, instead of giving you a huge choice that you then have to go through, we're going to say, based on what you've told us that is your best tariff. You can choose to switch to it.
Because we now understand what it is the individual wants, then each year we can continue to switch them to their best tariff, not some idealized tariff, but a personalized choice, as if they'd done the comparison themselves. Some people might still like to compare every month. If they choose to do it, they can keep doing that.
Those who just want an easy life but their exact choice will be able to use MSE's new auto-switch service, and there ain't anything else like it on the market. We've been developing this for a long time. I'm really excited about it. I've been all over the team on it, and it's going to be fantastic.
Very good. All right. Let me try and summarize the key elements of our auto-switch proposition. For the user, it will offer tariffs from the existing provider panel, the same deals as if you did it yourself. For the provider, they will have the ability to differentiate on multiple factors to provide sustainable economics. Of course, we're able to leverage our group capabilities in our move into auto switching.
Our existing technology, the existing commercial relationships, and most importantly, with MoneySavingExpert, we have the trust and existing communication channels to launch the proposition. Let me wrap up. We are pleased with delivery in 2019. We've delivered the planned return to profit growth, and we're making exciting progress on our strategic delivery. We're operating in growing markets, but there are also headwinds in the economics of core comparison, driven by the role of paid search and the shift to mobile.
Our optimization gains are combating these headwinds. We think we are well-placed to move the price comparison experience and economics forward with our personalization agenda. Our work to date on MoneySuperMarket has shown that we can increase customer retention, and we are excited to increase the number of customers using our monitored services in 2020.
Having deliberately sat out the first round of experimentation, we're about to bring auto switching to MoneySavingExpert in a way that meets users' needs and provides sustainable economics for providers. It's going to be an exciting year. Trading is off to a good start. I'm happy to confirm the board's confidence in meeting our full-year expectations. Finally, before we open up for Q&A, I wanted to make a couple of comments about my indication to Robin of my wish to discuss CEO transition. I think MoneySuperMarket Group is a fantastic business.
As we've shown today, it is delivering on its strategy. It's my absolute honor to lead a group with such a compelling mix of strong purpose and strong business model. As we progress through the third year of the reinvent strategy, I found it the right time to consider my position. The group is in great shape.
I'm very proud of the team we have built, what we have delivered over the last few years. Having reset the business at the start of 2018, we have worked hard to transform the group, having built new capabilities and adding new revenue streams. The plans for 2020 are set. The team is well placed to deliver them, and we are confident in our growth expectations.
I will work with Robin and the board to ensure that process is managed in an orderly fashion. For now, it is very much business as usual. As for my next steps, well, there are a range of things I want to achieve in my career. Today is about this business. I will politely defer that conversation to a later date. With that, let me open up the floor for questions. Thank you very much.
Hi there, Joe Barnet-Lamb from Credit Suisse. three from me to start with, please. With regards to Home Services, looking at Q1 2018, I think a lot of the strength in Home Services came from the back end of the quarter. Given the comment that you've made about it being flat year to date, could you help us understand the shape of that quarter?
Secondly, with regards the transition to mobile and the impact that's having on gross margin, can you help us understand how far through that transition we are and how much longer you think it will go on for? Mark obviously touched on it continuing into 2020. Thirdly, can you quantify the SEO headwind and how long you expect that to continue?
Of course. Joe, I'd like to remind you said you didn't have any questions before we sat down. Scilla, why don't you do the first one, and I'll do the second, and then maybe you go back and do the SEO one.
Sure. Just for the transcript, you referred to Q1 2018. I think Q1 2019 for Home services.
Funny way.
Yeah. Funny how you tripped me up all the time, Joe. Just flies by. I'm not going to give you six-week forecasts. Just to remind everybody of what we saw in the first quarter last year. We saw really stellar growth in terms of the numbers that we printed. A reminder of the shape to that, though.
Clearly we had the announcement of the first change in the price cap sort of midway through that quarter. That, and the sort of press surrounding that, combined with some good tariffs and some exclusives that we had did mean that the performance in that quarter was sort of second half weighted. We said within the outlook that we've so far year to date performed flat on the prior year.
We're comfortable with our growth expectations across the year, but I'm not going to give you a six-week preview for the second half of Q1, Joe.
Thank you very much. Transition to mobile. I think we've previously said that we felt as though we were over halfway through on this. It is true that the majority of visits to the site now happen on mobile devices. Remember, mobile is growing. Tablet is now relatively small in the mix, and mobile is where the growth is.
That movement did continue in 2019. As I said in the summary, it didn't slow down in 2019. Actually, the pace with which the migration is happening stepped up a little bit in 2019. We don't know if it will continue at that level or step up further in 2020. We're guiding that we think there's about a one percentage point headwind that comes from it this year.
Looking at SEO for last year. As you know, most of that impacted us within the insurance vertical, so that's what we're talking about. I'm not going to precisely quantify it, but I'd point you towards two things in terms of what we've said.
When I'm talking about the sort of shape of the gross margin change year-over-year, I sort of said one percentage point DT, one percentage point the shift to mobile, and the largest element of the balance was the transition in terms of traffic mix away from SEO. If you go back and look at what we said in Q2 last year, we just printed +4% from an insurance vertical, and we talked about good momentum.
I think you can infer from that what we were hoping we might be delivering in Q3, and then we reported actually +3% for the quarter. I think both of those things are sort of relevant touch points for you.
Andrew.
Thanks. It's Andrew from Barclays. I've got three as well. First one, on the monitored services, the 600,000 number, can you give us a sense of that plateauing or accelerating? I'm just trying to understand, is that kind of early adopters who really care about switching, or is this now becoming mass market and you think that can become a really big number?
Second question back to the auto switching, anything you can share a bit more about the economics from a provider perspective in terms of how you're thinking about it? I guess the release talks about a CPA type model. Is that kind of comparable to a normal switch? I guess it's going to increase churn. How are the providers thinking about that? Third one's maybe one for Robin, just on the search.
Anything else you can share in terms of timeline, internal and external, any other color you can share would be great. Thanks.
Okay. I'm going to actually tackle the third one. We have nothing more to share today on that, on timeline. I know Robin will be around after the session, there's nothing more we have to say on that today. Remember, I try to stress I am here, no data set, and it is business as usual. If you're okay, I'll take the monitoring and the auto switch question.
On monitoring, we've announced over 600,000 customers. We're pleased with that scaling number in 2019. Obviously, we want it to be a bigger number, and we are confident in our ability to grow the number of monitored customers. Your question is, are they early adopters and so on? We have tried to be as statistically robust as we can be in our analysis.
When we're at risk of going down a statistical rabbit hole, which I know you will love. The cohort that we have shown in the presentation, is deliberately determined to strip out such factors as you might be alluding to. Exciting times. Remember, it's not just Credit Monitor, we also have Energy Monitor and Car Monitor in the mix as well.
As for auto switching, the economics for the provider is one of the key elements here. Let's not forget, the user side of this is very critical as well, in that people want the right tariff for them, depending on their preferences. Actually, they need the switches to be managed very smoothly so they don't get surprised by direct debits which come at them out of nowhere.
The provider side is where the economics is really interesting, and where we have worked very closely with the providers in order to build a service that meets both the needs of both sides of the marketplace. I think as we've said under the slide, we're doing this under the existing commercial model that we have with providers.
The really critical piece in there is actually allowing the marketplace to work in a way that meets both sides by creating a service which allows the providers to differentiate on the things which they think that they are best at, which is actually also what the users want as well.
As Martin alluded to in the video, understanding the preferences of users around things like green energy or service and allowing the providers to differentiate, and that's what underpins the sustainability of the economics. Any questions?
We'll go here, then we'll go.
Hi, it's Natasha Brilliant from Citi. Three questions as well, please. Firstly, just on the insurance, just coming back to the algorithms. [Natasha] said I think you're almost back to your previous sort of levels in terms of the search rankings. Are you confident you can get back to those levels, and how long it will take?
Then what's the risk around further algorithm changes and this having a sort of ongoing impact as we go forward? Secondly, just on the FCA review on insurance, keen to get your thoughts on how you think that might drive both searches and also conversions, if you've got any thoughts around that.
Finally, just on money, just to be clear, when you talk about growth in 2020, is that on an aggregate basis for the full year, or is that returning to a positive rate by the end of the year?
Do you want to start on FCA, then I might just build on it?
I will start.
Yeah.
I didn't quite say what you've repeated back to me. I hope I didn't. What I said is we haven't returned to the kind of consistently high positions that we enjoyed in 2018 and the first half of 2019. We have seen some improvement as we go into 2020. It's important difference to land. Do you want to talk about further algorithm changes?
Yeah, why don't I talk about that? Algorithm changes on search engines are a part of life in this industry and any online industry. The key question I think as a business is, do you have the skills and the capability to identify them and adapt and so on? I think we have a very good record in that regard.
That said, without doubt, and there's plenty of commentary on this across multiple industries, the algorithm changes that we saw around Q3 last year looked a little bit different from ones that we'd previously seen in that they didn't settle as quickly. In fact, they created a little bit more volatility than we had seen in previous algorithms. I think there's a very consistent commentary around that across the industry. Now, our position is exactly as [Natasha] has described, and we're good at this stuff, so.
Shall I do FCA, you do money? Yeah.
Sure.
FCA. We are waiting on the final report. It's due in Q1. I haven't seen if it's come out this morning, but I'm assuming that it hasn't.
No.
Our engagement on it so far has been very positive. Remember, the regulators have declared very strong positions that comparison is a force for good and does help users deliver value. We're anticipating that any supply side remedies will fall on protecting the very vulnerable, and that's obviously a good thing.
Really, all the movements that we continue to hear is encouraging signs around demand side remedies, making it easier to switch, easier to port accounts over from one provider to another, and that does seem to be a pretty consistent trend now from the regulator. That's our understanding of what will come.
I think the one build I'd add on that, and it's because it's often sort of forgotten when we're talking about it, is remember within insurance in particular, what can frequently drive the switch is when you've had a risk changing event. Clearly the market study isn't thinking about that. Just in terms of MONY Group, the guidance that we've given is that it will return to growth during 2020. I'm not going to add anything else on that.
As we've said, in the first six weeks, we have seen some improvements on performance. Take that as we know we've had some improvement versus where we exited last year.
Thank you. Bridie, I think you had a question.
Bridie.
Thank you. Bridie from Stifel. Coming back to the partnerships, the six partnerships that you have announced in energy with Yolt and several others. Are they actually generating any leads, or is it sort of just on the marketing stage at the moment?
Decision Tech, as we said, overall grew double-digit. We're actually pleased with our penetration into that market now. I think at this time last year, we had announced the first, that's the timeline for this going. Now we do have a number of partners that are generating interesting number of leads.
What we're finding is that our proposition, remember the energy proposition that Decision Tech can now take into the market is built on our group technology and commercial relationship. Which means that it's a really strong proposition in the market. We're pleased with that progress. I don't know if there's any more breakdown that we want to share at this stage. I don't think we do.
Thank you. Just one more, sorry. Just struggled slightly to read between the lines on the business model of the auto switching.
Yeah.
Does that mean you're not going to be doing the kind of tenure model that your friends over at GoCompare are offering? Is it going to be more of an annual proposition?
We're building it under our existing model.
Okay.
We think it can be done under the existing model.
We should be thinking of kind of a minimum switching period of annual rather than maybe every three monthly or something like that.
I would want you to take that away at this stage, yeah.
Your key point is that we get paid when somebody does a switch rather than it being a tenure.
Thank you.
Yeah. Thank you for raising. This is a very important point that people understand. We don't need to change the model to do it. I think there's a question on the webcast.
We have a couple of questions from the webcast from Edward James. Firstly, the launch of auto switching comes as a surprise, given you talked down the proposition in both the full year 2018 and half year 2019 results and said the consumer is not ready for it. What's changed in that view, and why has there been no incremental marketing tech or OpEx costs guided for the launch of this product?
Yeah.
What's the revenue expectations for 2020 and 2021? Another question. Consensus is looking for 7%-8% EBITDA growth. That's a step up from 2019 on an underlying basis or ex the impact of M&A. With sales growth unlikely to be as high as that, and marketing margin likely to fall again in 2020, is this growth driven by reduction or flat OpEx base? Is this sustainable beyond 2020?
Okay. Why don't you do the first one, and I'll do the second one.
I'm so glad you said that. Right. Auto switching. Well, I hope it's not a surprise. I think we've been incredibly consistent, actually. What I've said today is that we have deliberately sat out the first round of auto switch services, because we haven't seen them work as a marketplace. We haven't felt that we could endorse the models that we've seen in the marketplace.
We are taking to the market in the first half, though, an auto switching service which is deliberately designed to meet the needs of users and overcome their concerns and meet the needs of providers and overcome their concerns. For the consumer, that means allowing them to choose what matters to them most in their energy choices. It means managing their switches so they don't lose control.
For the provider, that means creating a marketplace where they can differentiate on multiple factors, not just on price. It is just a fact that the combination of a short duration tariff with a only differentiation on price is really challenging to provider economics. We have worked with our providers to build an auto switching marketplace that meets both needs.
We're super excited about that. Question was why are we not increasing the investments in order to do that? Which is a fantastic opportunity to me to remind of our strength of our capabilities. We have a group proprietary energy stack, which services MoneySuperMarket, services MoneySavingExpert, services our Decision Tech proposition, and will service Auto Switch. As the question has come in, we will do this under our existing commercial relationships with our providers.
Of course, with MoneySavingExpert, we have our communications channels. We have that trusted voice in the market to take such a proposition to market. We're very excited about that space. Any guidance on that is concluded in the full year guidance at this stage.
Just kind of turning back to the question on how do we get to the guidance number. We have included within the statements and sort of more detailed guidance on outlook, just in case anybody missed it on page eight of the RNS. As you've seen, we've confirmed that we're comfortable with market expectations, and we're confident in meeting those for 2020.
We have separately given some guidance that we still expect there continuing to be some pressure in growth margin from the mobile shift. We've given some guidance in relation to what we expect from a cost base, GBP 5 million incremental marketing spend with our costs remaining well controlled. I'm sure you all have your own view, therefore, as to how you get to that EBITDA number. A couple of points to point out in terms of top line.
Clearly, we've said that we're comfortable where we've started the year. We expect MONY to return to growth during the course of 2020. We also expect that the market switching conditions will be more favorable in 2020. We've previously talked about a return to premium inflation within car.
Two questions. One, just on price caps, given the growth that we're seeing in energy switching overall and your comments, I think my conclusion is price caps have been positive for switching. Is that your conclusion? Second question, on the brand marketing point, the GBP 5 million incremental spend there, I'm still not quite clear exactly why you're doing that.
Can you just give us some more color exactly your thinking there, and is this the new sort of structural level of brand marketing going forward? We always felt previously there was a certain limit and level, and beyond that, there wasn't much point.
Maybe I'll take the price cap one. Maybe you touch on brand, and then maybe I'll just add something to the end of it. Price caps, I think we agree with your conclusion. What have price caps done? They've absolutely put in a cap for more vulnerable users, and that is a good thing, and we're pleased with that.
In terms of how they've landed in the market, they haven't really changed the dynamic that says that you, as a user, are much better off if you choose to switch your energy rather than sit on a standard variable rate. That number, I think we said last year, is sort of bouncing around a little bit as the price goes up and down, but it has remained very healthy. As I said before, hundreds of pounds worth of savings to be had by switching in energy.
What the price caps have done, which is the opposite of what we feared it might do, we feared it might lull people into a false sense of security. What it's actually done is introduced a trigger into the energy market, because it creates now an event in the year where you receive communication that says your bill is going up or down or changing.
That, I think, has been a stimulus in the market for switching for energy. Let's remember, it remains, and you saw it in Scilla' slide there, it remains a market with significant headroom. There are still millions of households that could save hundreds of GBP on their energy. We think that we have an opportunity to unlock, and we think also switching on MoneySavingExpert and the monitoring services we have will help drive that forward.
Do you want to talk about the brand marketing piece?
Sure.
I'll just link it back to the statements I've made previously.
The GBP 5 million, sort of why now, if you like, is really because through some of the initial results we're seeing through the monitored customers, we're seeing some of that uplift in value, we feel it's the right time now to beginning to drive more people, if you like, into the brand awareness in the top of our funnel.
Just to clarify, though, because we have had a couple of questions on it this morning. Don't expect to see that GBP 5 million talking solely to monitor propositions during the course of the year. It's GBP 5 million on our MoneySuperMarket brand through 2020.
Yeah. That's absolutely right. I just want to link it to the sort of previous statements that we've made where we said there's a sort of natural level of brand spend. The thing that would force us to, not force us, but to encourage us to reconsider that would be if we had a propositional shift.
If you think of the phasing of what we have done, at the start of 2019, we did reposition the brand. We moved it into Get Money Calm to create the halo for personalized services. We have brought the personalized services into the core of the experience. I guess today we are sharing some of the impact of that.
That is creating the point for us to reflect and say, "Okay, we've now got the confidence to actually push a little bit harder on that brand proposition." There is a connectivity to the statements that we've made previously. We have a question on the webcast.
We have a couple of questions from Hubert Lam from BofA. Given higher servicing costs of policy monitoring, do you need cross-sell to create value on those customers, or is lower paid search enough? Also, could you please comment on market growth for credit card switching, i.e., is there an element of share loss to alternative competitors?
Shall I take the first, you take the second? The economics of our personalized services, I'm just going to draw everyone back to slide 23 in the deck. There are multiple things that move, and we've shared what we are finding into this as clearly as we can with the history that we have.
What we are finding is that actually you're seeing a number of things move around. Yes, you do see a lower paid traffic mix, but people are coming back more. We continue to see that. Yes, we do see an increase in our servicing costs. The key dynamic here, though, that is very encouraging, I think, is the stuff on the left-hand side, which says that these customers return with a greater frequency.
That of itself is very positive, and the cross-sell, the fact that that is driving activity across multiple categories, we think is also very encouraging. Do we expect these to move around as it scales and as we launch new services? Of course, we do. Do we hope to add more customers to our monitoring services? Of course we do. We are very encouraged by what we are seeing in this analysis so far. Do you want to?
Sure. I'm not going to share something in the market data in terms of the credit card side of the business, but I guess I'd point to some things we've said before, where historically you know that we've particularly played strongly within more of the prime element on credit cards. Some of the competition that I think probably Hubert is alluding to has been more in the near-prime, sub-prime area. What we have looked to do, though, you've seen, is further improve our eligibility journeys, which should help address some of those nearer-prime customers.
Clearly you've seen Credit Monitor as our approach also to help support those customers to the points I was making to make sure that the product that they see is what they are going to be able to get and encourage them along the way in terms of improving their credit scores so that they've got more choice in terms of credit cards once they've improved those scores.
Okay. Look any more on the web? No? All right. Thank you very much. As I said, it's going to be an exciting year. Trading's off to a good start. We're happy to confirm confidence and expectations. Thank you very much.